E-rate under new attack in Congress

After a weathering a bloody congressional fight for survival in
1997, federal subsidies for school and library Internet connections appear
to be headed for another rough year.

Federal legislators have prepared at least three bills that would end or
dramatically change the program, dubbed the "e-rate."

Passed as part of the 1996 Telecommunications Act, the subsidy provides
schools and libraries with discounts of up to 90 percent on Internet
services and wiring costs. Funds for the program come from a small
surcharge on consumers' long distance bills, as part of the universal
service system that also subsidizes telephone service in rural and
low-income areas.

Last year, Republican lawmakers took aim at the program, dubbing it the
"Gore tax" and working to kill the charge or scale it back. GOP critics charged that it was essentially an illegal tax being used for political benefit by the Clinton administration.

After considerable congressional pressure, the Federal Communications Commission slimmed the program's first year funding from an initial $2.5 billion to $1.275 billion. The first round of funds was distributed after long delays in November.

Rep. Tom Tancredo (R-Colorado), beginning his first term in Congress this year, is planning to introduce a bill initially called the E-Rate Termination Act. That measure, which would end the program as it now exists, has won the support of two other GOP representatives, Ed Royce of California) and Pete Sessions of Texas), who have signed on to the measure as co-sponsors and are helping solicit more support in the House.

"If it wasn't for impeachment, this issue would be the No. 1 issue
we've heard about from our constituents in recent months," said Bryan
Wilkes, Royce's press secretary.

More worrisome to backers of the e-rate is a joint effort from Sen.
Conrad Burns (R-Montana) and Rep. Billy Tauzin (R-Louisiana), two influential figures on telecommunications issues.

Both plan
this year to reintroduce legislation that would phase out the subsidy
program's connection to consumer telephone bills and the universal
service fund, a link they say makes it an unconstitutional tax by the FCC.
Instead, they would halve the current federal excise tax, which reaps about
$4 billion from taxpayers at large, and dedicate the remaining $2 billion
to school and library telecommunications needs.

"That would legally fund the program," said Ken Johnson, a Tauzin
spokesman. "If anyone challenges the program [as it is now], it is likely to get thrown out. The FCC does not have the constitutional authority to raise taxes or collect them."

Supporters of the program say the Burns-Tauzin effort is not a genuine
attempt to save the program, however. They say that by pulling the e-rate funding out of the universal service program, and requiring its funding to be reviewed by Congress every year, critics are setting it up for future cutbacks.

"The plan to transfer the e-rate into an annual appropriation is an
attempt to strangle the program," said Jeff Chester, executive director of
the Center for Media Education,
an advocacy group that supports the program. "The Tauzin-Burns bill is a
bald-faced attempt to kill the e-rate."

The battle is likely to win the attention of Silicon Valley companies such
as 3Com, which have strongly supported
the program and have benefited from school and library spending on Internet wiring and equipment.

E-rate critics also may tie their opposition to scrutiny of the FCC, which has been under fire from many of the same lawmakers for its implementation of other pieces of the Telecommunications Act.